Starbucks Blends Brews and Blues

October 15, 2004

Starbucks • Starbucks Tries a Downscale Approach • Economy Sour, Starbucks to Close More Stores • Starbucks to Close 600 U.S. Stores • Baristas Beware: Starbucks Puts Machines in 86 Stores • Starbucks Serves Up Free Wi-Fi • Starbucks Cuts Trans Fats • Starbucks Data Loss No Laughing Matter • Starbuck Raising Coffee Prices • Starbucks Sales Losing Steam • Starbucks Plans to Get into the Digital Download Business • Starbucks Pours on the Trans Fats • Starbucks Raising Prices • Starbucks Blends Brews and Blues --- • Consumer Complaints

Traditional record stores are going the way of independent coffee shops. Soon you'll be able to blame Starbucks for both trends. The company is introducing CD-burning stations where customers can brew up a blend of their favorite songs on a single CD while the barista whips up their latte.

Starbucks' "Hear Music" kiosks will feature four to six flat-screen PCs where customers can scroll through a library of about 200,000 songs, pick the ones they want and then swipe their credit card. A few minutes later, out pops their custom CD. Each CD will cost $8.99 for seven songs, not much more than a vente frappuccino. Additional songs are 99 cents each.

The company is installing its first media bars in shops in Seattle and Austin, Texas. After working out any sour notes, it will presumably expand the service rapidly throughout its 4,200 U.S. stores.

When it comes to music, Starbucks is not exactly a green bean. Its "Genius Loves Company" CD was the nation's second-best-selling album last month. Earlier this month, Starbucks launched its Hear Music channel on XM Satellite Radio.

Record stores are scrambling to catch up. Tower Records, Virgin Megastores and FYE stores are all preparing to install CD-burning kiosks on at least a trial basis this fall. They've already lost market share to the likes of Best Buy and Wal-Mart and are no doubt horrified at the prospect of a chain as huge as Starbucks invading what's left of their turf.

The music industry has been lukewarm to previous experiments by Blockbuster and other companies. But with the success of Apple's iTunes music stores, it's starting to sink in with record executives that burn-your-own outlets are better for the music industry than uncontrolled illegal downloading.

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